Planet Fitness’s Risky Decision: Could It Push Members Away?
Planet Fitness is making a significant change to its membership pricing for the first time in 26 years, and it may not sit well with some customers. During a recent earnings call, the company announced that it will raise the price of its Classic membership by $5 after testing the increase in various markets. This marks the first price hike in over two decades, and the company hinted that more increases could follow.
“For the past several months, we have tested three different price points for our Classic Card membership across different groups of stores,” said Planet Fitness Chief Financial Officer Tom Fitzgerald during a May 9 earnings call. “Based on those results, we’ve decided to increase the price from $10 to $15 to boost the average unit volumes for our stores.”
This new pricing will take effect in the summer and will apply only to new members who join after the change. Existing Classic Card members will continue to pay $10 per month as long as their membership remains active.
Planet Fitness also suggested that its Black Card membership, currently priced at $24.99 per month, may soon see a similar increase. Interim CEO Craig Benson mentioned during the call that the company is experimenting with different pricing strategies.
“We’re exploring both pricing and amenities as part of our focus on innovation,” Benson said. “We’ll begin testing Black Card price increases around the same time the Classic Card price change goes live.”
Despite these adjustments, the company does not anticipate a significant impact on membership cancellations, as the new prices will only affect incoming members. Benson noted that price changes are common across industries.
“We’ve seen prices move in every industry, so it’s not going to come as a shock that we are adjusting a price that has stayed the same for 25 years,” he said.
Planet Fitness is performing well financially, with total revenue up 11.6% year-over-year according to its first-quarter earnings report for 2024. However, the company is managing a $600 million debt, due by September 2025.
The company is also recovering from a controversial incident in March 2024 at one of its Alaska locations. A woman took to social media after she encountered a “man in the women’s locker room” who identified as a woman. After taking a photo of the person, she was banned from Planet Fitness for violating the gym’s mobile device policy.
In response to the incident, Planet Fitness stated, “Our gender identity non-discrimination policy allows members and guests to use facilities that best align with their sincere, self-reported gender identity.” The gym clarified that the woman’s membership was terminated because she violated the policy prohibiting photography in locker rooms.
The incident caused backlash and affected the company’s membership activity. Benson acknowledged that media attention surrounding the situation led to fewer membership joins and increased cancellations in March. However, he emphasized that Planet Fitness’ policy aligns with those of other fitness brands, including the YMCA, and has been in place for over a decade.
“We believe the media mentions contributed to the softness in joins and the rise in cancellations for the remainder of the month,” Benson said.
